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December, 2018

Housing demand keeping prices high, developers say

A lack of housing supply and restrictions on funding and sales to foreign buyers, mean prices will remain high, says developer Crown Group’s Iwan Sunito.
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Speaking in Sydney on a panel at an Australia Israel Chamber of Commerce event, Mr Sunito said there was no question residential prices are rising rapidly, but it’s more to do with the supply-demand model.

In a wide-ranging discussion, the panel, which included head of Charter Hall, David Harrison, and the executive general manager of funds management at Dexus, Deborah Coakley, said issues such as increased migration and population, infrastructure projects, crowd funding by retail investors and even driverless cars, were issues impacting on the commercial and residential property sectors.

Mr Sunito, who has developed the Infinity project at Green Square and Waterfall at Waterloo in Sydney, said restrictions on bank funding and selling to foreign buyers has led to some developers scaling back projects.

“Post the global financial crisis, the supply side has been diminishing which has pushed up prices,” he said.

“We are still building, but I know of other developers that have scaled back.”

Mr Sunito took a swipe at local councils saying, there should be less “red tape and more red carpet”.

Mr Harrison said on the issue of funding, that in simple terms, governments get involved and put restrictions on free markets “when prices get out of control”.

“With restrictions on banks and pressure to change from interest only to principal and interest loans, and the number of state-driven taxes, these are all affecting foreign buyers,” he said.

“It’s a series of government reaction to the affordability crisis.”

Ms Coakley said the rise in population was helping to keep office vacancy rates at historically low levels. Confidence up

The comments were made against the backdrop of the latest ANZ/Property Council Survey for the December quarter, which shows a strengthening of the NSW property industry’s confidence.

NSW industry confidence has increased from 139 index points in September 2017 to 147 index points in the December quarter, indicating a significant strengthening of industry sentiment.

Property Council NSW executive director Jane Fitzgerald said forward work expectations and economic growth expectations had increased over the quarter, showing an industry solidifying its position in an uncertain policy environment.

“There is also an easing in expectations around debt finance availability this quarter after three quarters of worsening sentiment,” she said.

“What this most recent survey indicates is that the NSW industry is resilient and has a confident outlook to the future; and it’s important this continues.”

Ms Fitzgerald said there are 70 pieces of planning policy being considered by the NSW government, according to the Department of Planning website; policy that has been consulted on yet is awaiting a decision.

“It is this policy that we must see decisions on in order to continue the strengthening of industry confidence and ensure economic and jobs growth continues,” she said.

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Tie-up puts bounce back into Flying Kangaroo

When Qantas entered into its first partnership with Emirates five years ago, the Flying Kangaroo was a very different beast to the one it is today. The international business was losing hundreds of millions of dollars, fuel was expensive, the cost base was too high and the airline was trying to ditch loss-making routes.
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It’s fair to conclude that when that marriage was thrashed out, the Middle Eastern partner was in a far stronger negotiating position. There was plenty of commentary written that Qantas didn’t benefit to the same degree as Emirates.

This may have been so, but the reality is that regardless of which airline posted the biggest gain, the deal did ultimately play a part in the revival of Qantas’ fortunes. It provided access to Qantas customers with greater frequency and a far wider network of European destinations without the need and the cost of using its own planes.

Fast forward five years and Qantas and Emirates are back at the negotiating table and so much has changed.

Firstly Qantas is not the financially undernourished creature it was – indeed over the past two years it produced record profits and the international division reported underlying earnings before interest and tax of $327 million in 2017.

There are still plenty of reasons why the partnership with Emirates works, most of which involve access to routes and frequent-flyer programs.

But it is hard to imagine that this agreement cannot but favour Qantas more than the previous one.

While not suggesting (as Qantas boss Alan Joyce and Emirates chief Tim Clarke do) that this isn’t a win-win, one gets the impression that Qantas has spread its wings a bit further in this relationship. London calling

There will be less overlap with Emirates, in that both carriers will no longer fly from Australia to London via Dubai. This will be strictly an Emirates route, even though Qantas will code-share on it.

Qantas instead will offer two different ways to get to London – using Qantas aircraft. The first will be from Melbourne via Perth then non-stop to London and the second will be from Sydney to London via Singapore. Emirates will code-share on the former route and on the Sydney to Singapore leg of the London flight.

The additional detail announced by the partners on Wednesday will see Emirates all but cut Australia out of its Dubai to New Zealand route, with one Sydney-Christchurch exception. This will allow Qantas to greatly boost the capacity of its east coast flights across the Tasman.

Qantas admits that the changes will see more people flying on Qantas livery. Logic suggests this will be more financially beneficial for Qantas because (again) logic suggests airlines will make more money from a passenger sitting on their airline than on one with which it code-shares.

But this is not something the partners are prepared to discuss. Indeed, the magic formulae they use to share the spoils of this agreement is one of the best-kept commercial secrets of all time. Both parties prefer to say that it is far more complicated and invoke the “win-win” explanation.

One of the other big changes over the past year has been the increasing importance of traffic between Australia and Asia.

Under the Qantas-Emirates partnership Mark I, Qantas abandoned its Asian hub to London, but these days clearly considers it a must in its route network.

Where five years ago Qantas international was looking to reduce routes, the huge reduction in the cost of fuel has enabled it to start adding new ones.

The third change in the airline industry is technology and this is likely to become the biggest factor in determining how the partnership will look in another five years.

Advances in aircraft technology now allow Qantas to offer a non-stop flight from Perth to London and Joyce is certain that in five years the airline will be flying from Australia’s east coast direct to London and New York.

There are whispers that even the aircraft being delivered next year will open up some interesting route options; one being talked about is Brisbane to Chicago.

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‘Cracks are starting to show’: The surprise Sydney area leading the slowdown

Sydney’s eastern suburbs have emerged as the weakest market in the city with house prices falling 6 per cent in the three months to September, new data shows.
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In fact, all but two regions recorded price falls over the September, with the south-west the next worst performer (-4 per cent), followed by the once-red hot inner west, which fell 3.9 per cent, according to the Domain Group State of the Market report.

The most resilient markets were the northern beaches, where the median house price increased 0.4 per cent to $1,907,000, and the south – with no price change at $1.3 million.

Domain Group chief economist Andrew Wilson said the results showed the downturn was widespread across Sydney, with affordability starting to bite even in the higher-priced city and east where the median was $2.17 million.

“More than $2 million is expensive in anyone’s language – clearly buyers are thinking twice,” Dr Wilson said.

Good Deeds buyer’s agency principal Veronica Morgan, who actively buys eastern suburbs real estate, wasn’t convinced the market had slowed across the board.

“We have noticed a softening but it’s sporadic,” Ms Morgan said.

She’d also noticed more substandard homes coming onto the market, which she described as a market in transition.

Brad Caldwell-Eyles, managing director of 1st City, said there had been a “slight cooling in enthusiasm and a decrease in that sense of urgency for existing residential property” in the city and eastern areas.

But he said it was likely a softer period due to the increase in homes for sale over spring.

“Bottom line, recent history shows that we can expect this spring cooling in established residential enthusiasm however come Australia Day, that fire will be stoked back into life.”

Richard Baini director of Richard Matthews Real Estate, located in Strathfield, was not convinced the inner west had moved into a downturn, despite the data showing a 3.9 per cent decline for houses and an even steeper 4.9 per cent drop for apartments.

Instead, he described it as an “adjustment quarter” with more realistic pricing from vendors and reasonable expectations across the board.

He put the softness in the apartment market down to a decline in off-the-plan sales that had the effect of changing the mix of properties on the market to secondhand stock, which is typically more affordable, thus skewing the median price.

Apartment prices fell in all areas except the south west, west, Central Coast and northern beaches.

But the worst performer for apartments, outside of the Blue Mountains, was the lower north where prices had declined 6.7 per cent over the quarter to a median of $900,000. They were up 0.1 per cent over the year.

House prices in the lower north fell 2.6 per cent over the quarter to $2.41 million, but were up 2 per cent over the year.

Richardson & Wrench Mosman director Robert Simeon said this was an inevitable outcome after such a run in the market.

“At the moment the market is fatiguing and we’re going to see a self-correction and then a line-ball market,” Mr Simeon said.

He said without “significant economic bad news like another GFC” it would be unlikely prices would drop significantly.

“There are fewer and fewer buyers at auction, but this is what happens after a boom.”

The western suburbs had also been seeing signs of a slowdown, Raine & Horne Blacktown’s Edwin Almeida said.

“We’re in for a rude shock and the cracks are starting to show,” Mr Almeida said.

He’d already seen some homes selling for less than they would have achieved six months ago.

Starr Partners chief executive Doug Driscoll said it was “simple economics” that the market was slowing down.

“For a long time, we were seeing an influx of investors from across Sydney looking to buy in the west and south-west and this volume applied extra pressure on the market,” Mr Driscoll said.

“External influences we wouldn’t normally experience in these parts of Sydney meant prices grew at an exaggerated rate.

“Now that there are fewer investors, and lenders are becoming increasingly prudent, I think it’s a case of the market now starting to find its natural level.”

This story Administrator ready to work first appeared on Nanjing Night Net.

The new Byron? Regional market clocks staggering growth

They may both be a 90-minute flight from Sydney, but when it comes to house prices, Ballina and Byron Bay are going in different directions.
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House prices in Ballina jumped a staggering 7.1 per cent over the September quarter, making it the fastest-growing regional market in NSW, Domain Group’s State of the Market Report shows.

Ballina now has a median house price of $621,250 – a jump of $44,000 in just three months.

Over the year, the median rose 14 per cent from $545,000 last September.

When his waterfront home at 108 Riverside Drive in West Ballina sold for $1.425 million at auction two months ago, Chris Brombal was pleasantly surprised.

“We couldn’t have been happier, we were thinking hopefully around $1.3 million, but yeah the result blew us away,” he said.

“We had 45 inspections and then five different bidders at auction.”

“Now we’re moving to a farm in the area, near Austinville, because the kids are young and they wanted motorbikes and a cow.”

Licensee of LJ Hooker Ballina Michael Shay, who co-managed the sale, said there was a buzz around Ballina.

“The market is very strong here in Ballina Shire, so houses that have the correct price on them are selling immediately and in fact often over the listed price,” he said.

Last week the sales record for Ballina Shire was smashed by a waterfront home in Lennox Head selling for $4.06 million at auction.

Increased development in the area has helped fuel price growth, according to Mr Shay.

“As well as a lot of people selling their homes to downsize, we see a lot of locals buying into the new estates and upgrading. Builders have been very busy here,” he said.

In 2013, a planning panel approved rezoning a 35-hectare farm at Skennars Head – adjacent to Ballina – into 500 residential lots and potentially a shopping centre.

But while house prices are shooting up in Ballina, in nearby Byron Bay they fell 3.7 per cent over the quarter.

The tourist hotspot is still the most expensive NSW market outside Sydney, with a median house price of $820,000 and has enjoyed strong price growth of 8.3 per cent over the year.

Domain Group chief economist Andrew Wilson said Ballina was emerging as an affordable alternative to Byron Bay.

“The growth has been extraordinary over the last three years and it’s not a surprise that we’ve started to see prices hit a bit of a ceiling in Byron. At once stage it looked like Byron was going to have a $1 million median.

“I think that with cashed-up Sydney buyers looking for that second property or a retirement property Byron is a favoured destination, but it’s very tightly held,” he said.

Other strong regional markets over the quarter included Clarence Valley, which grew by 5.3 per cent, followed by Port Macquarie (3.8 per cent), Shoalhaven (3.7 per cent) and Albury (3.4 per cent).

Shoalhaven and Shellharbour were the strongest performers over the year, with 19.5 per cent and 16.7 per cent growth respectively.

This story Administrator ready to work first appeared on Nanjing Night Net.

Canberra house price growth overtakes Sydney, Melbourne

MELBOURNE, AUSTRALIA – JULY 02: Generic crowd image during the auction for the property at 1/88 Queens Parade in Fitzroy North on July 2, 2016 in Melbourne, Australia. (Photo by Chris Hopkins/Fairfax Media) Generic auction signThe Sunday Age Domain Photo CATHRYN TREMAIN23 June 2005/cjt050623.001.005
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Canberra’s property market continued to rise in the third quarter, with rental rates and median house prices growing faster than the Sydney and Melbourne markets.

The latest Domain State of the Market report, released on Thursday, showed house prices in the capital had reached a new high of $723,980, up 4.3 per cent over the quarter and 10.5 per cent annually.

Experts said under-supply in the market was helping drive growth, with median prices for units increasing by 1.9 per cent to $427,391, recording a slight decrease of 0.5 per cent annually.

The capital’s rental market also remained strong, putting Canberra among the highest movers in the nation alongside Hobart, which saw 4.2 per cent growth.

Median weekly asking rents for houses grew 1 per cent in the quarter to $505, an increase of 6.3 per cent year on year.

Median unit asking rents were steady at $420, but remained up by 5 per cent year on year.

Domain Group chief economist Andrew Wilson said Canberra’s median house price had been down over the June quarter, but the strong market suggested prices would continue to rise through to the end of the year.

“The Canberra market grew significantly quicker than the Melbourne market over the September quarter, and also grew at a much faster rate than Sydney where house prices were down by 1.9 per cent,” Dr Wilson said.

“The two strongest markets at the moment are Canberra and Hobart, and it’s interesting to note that they are the two smallest markets as well.”

Sydney remained the country’s most expensive city, with median house prices of $1,167,616, ahead of Melbourne at $880,902.

The national median house prices was $819,455, down 0.5 per cent in the quarter by 10.80 per cent up on an annual basis.

Canberra had the highest unit rental yield in the nation at 5.77 per cent, increasing at 3.7 per cent year on year.

The figure put Canberra ahead of Darwin, Hobart and Adelaide, while Sydney and Melbourne had yield growth of 3.86 per cent and 4.47 per cent respectively.

“The unit result is quite interesting in Canberra,” Dr Wilson said.

“There’s been a building boom in Canberra for units and we’ve seen prices pick up again over the September quarter – up by 1.9 per cent and it’s set for a consistent increase.”

“This just shows that the return on investment is reflecting that Canberra units represent good value,” Dr Wilson said.

Census figures released in June showed the ACT is the fastest growing jurisdiction by population, approaching 400,000 and with 11.44 per cent growth since 2011.

The ACT looks set to pass Tasmania on population levels, driving in part by the growth of Gungahlin – the fastest growing region in the country.

Dr Wilson said the Canberra property market continued to show upward potential generally, which provided good value perception for both buyers and sellers.

“We saw through 2013-2015 a constraining of the Canberra market through local economic factors – the slashing of the public service budget and the small number of net migration, both had a significant impact on the housing market,” he said.

“Migration has turned around quite strongly now for Canberra, the unemployment rate has fallen back down again and no doubt the public sector is going strong.

“There’s upwards potential for Canberra and a good value perception from buyers and sellers in the Canberra market,” he said.

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